Seth and I both agree that Wal-Mart (NYSE:WMT) appears to be undervalued when compared with competitors like Costco (NASDAQ:COST) and Target (NYSE:TGT). Where we disagree is on why the stock is undervalued. It's not clear to me from Seth's article why he thinks the company has underperformed in recent years. Is it really a result of the market not recognizing its superior EPS growth? If that's the case, it seems like the market is even stupider than we at the Fool are always making it out to be.

Like the British Empire before it, there is a glaring flaw in the superstructure of Wal-Mart's empire. In the case of Britain, it ultimately became untenable for a country of liberal, democratic values to be autocratically ruling over a subcontinent of hundreds of millions of people. In the case of Wal-Mart, it will be very difficult to offer ever lower prices and treat its workers decently. And when 46% of workers' children are either uninsured or on Medicaid, it should be an issue of concern for more than just the "tree-huggers." Actually, I suspect it is more of a mainstream issue than Wal-Mart's defenders care to admit.

How will this play out? The handwriting is already on the wall. The newly hired spin doctors will start telling us that Wal-Mart is a lifeline for rural, unskilled workers and that the latte-sipping, chattering classes are a bunch of whining hypocrites. There will be allegations and movies and scandals and debates. And I suspect that year after year, Wal-Mart's shares will continue to underperform as long as it fails to take serious action to improve its reputation. Maybe this is the type of company that Seth, who usually holds corporate America to a pretty high standard, would like to invest in. I prefer to look elsewhere.

Costco is a Motley Fool Stock Advisor recommendation.

Wait! You're not done. This is just a quarter of the Duel! Don't miss the Bull and Bear opening arguments and the Bull rebuttal. Even when you're done, you're still not done. You can vote and let us know who you think won this Duel.

John Reeves does not own any shares of any of the companies mentioned.